Tesla Stock at Risk of Downturn Amid Interest Rate Hike Concerns

Analysts Notebook joined discussion · Sep 22, 2023 16:43

$Tesla (TSLA.US)$'s stock chart shows a history of sharp inclines and declines, with recent gains taking it close to $280 per share. However, CappThesis founder and market technician Frank Cappelleri are concerned that Tesla's stock may break below a steep uptrend line, which could lead to downside action similar to the last three times in 2023. The shares are currently threatening to fall below $260, with $240 potentially coming into play.

Source: moomoo

The reason for recent weakness doesn't appear to be related to the company. When the Federal Reserve maintains or hints at future rate hikes, it can lead to higher borrowing costs for companies. Tesla, in particular, has historically burned through significant amounts of cash and carries substantial debt. Higher interest rates can increase its interest expenses, potentially impacting profitability and cash flow, which investors closely monitor.

The market is in a corrective phase," said John Roque, senior managing director and head of technical strategy at 22V Research. "Tesla is not likely to be immune."

On Thursday, Ark Invest, led by Cathie Wood, sold 62,367 Tesla shares valued at $15.94 million through the flagship $ARK Innovation ETF (ARKK.US)$ and $ARK Next Generation Internet ETF (ARKW.US)$. This move comes amidst ongoing discussions about Tesla's potential in autonomous driving technology, despite recent rallies. Ark remains bullish on Tesla's future, projecting a stock price surge to $2,000 by 2027, largely driven by the anticipated launch of its robotaxi service, despite selling nearly $29 million worth of Tesla shares over the last few days.

Source: ARK

Source: Benzinga, Barron's, ARK

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

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Johnnyp : Tesla is NOT in debt! This article is clearly bias. BUY TSLA!

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WillyWonka : a dip never hurts..

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Bearbones : TSLA has less debt than the other manufacturers, significantly less...

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lightfoot : Remember interest rates rise, stocks go down. They the feds need to return to economics 101.

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